Private investment firms managing capital for ultra-wealthy families are moving aggressively into domestic real estate markets while institutional investors remain largely on the sidelines. Family office executives told CNBC that their long-term investment horizons and flexible capital structures allow them to pursue opportunistic acquisitions that traditional asset managers cannot underwrite. These investors have been able to acquire office properties for as little as 18 cents on the dollar and multifamily housing at double-digit percentage discounts to replacement costs. The deployment comes despite persistently high interest rates and ongoing geopolitical conflicts that have dampened sentiment across broader real estate markets.

Travis King, CEO of Realm, a collective representing approximately 100 families, said the group has deployed about $100 million into Northern California real estate over the past six months. Realm recently purchased an office property in San Francisco at roughly 21 percent of its previous transaction price and what it would cost to construct today. King explained the investment thesis centered on conviction that technology would remain a robust driver of the U.S. economy and that San Francisco's long-term fundamentals remained intact despite near-term distress. The firm is now trading paper on leases or purchase and sale agreements across several of these discounted properties.

King acknowledged that some families remain nervous about deploying capital during turbulent times, but said more are recognizing the opportunity created by depressed valuations. He characterized the current environment as difficult to live through as a citizen but compelling as an investor, noting that periods of dislocation typically produce the best pricing. The observation underscores a structural advantage family offices hold over institutional capital with shorter performance horizons and quarterly reporting pressures.

Matthew Cohen, partner at Declaration Partners—the investment firm anchored by Carlyle Group billionaire David Rubenstein's family office—said the firm's extended time horizon enables it to seize opportunities that traditional asset managers must pass on. Declaration Partners closed its second real estate investing fund in October, raising approximately $303 million. In recent months the firm has executed a flurry of transactions, including signing a $50.1 million master lease for three storefronts in New York City's SoHo neighborhood. While current tenant rents sit below market rates, Declaration Partners structured a 25-year lease with an option to extend through 2091.

The patient capital approach family offices can deploy in dislocation creates asymmetric opportunities. Institutional funds typically require business plans that can be executed within 18 to 36 months, according to Cohen. The long-dated SoHo lease required an investor willing to hold through lease expirations and work flexibly with a private owner to structure mutually beneficial terms. That patience and structural flexibility remains unavailable to most institutional mandates.

The firms deploying this cycle are the ones that built their models from replacement cost and demand fundamentals up rather than cap rates down, family office advisor Jaf Glazer has observed.

Family office surveys reveal mixed sentiment toward real estate allocations, though U.S.-based offices show notably more optimism than international peers. A February poll from J.P. Morgan Private Bank found 35 percent of U.S. family offices planned to increase real estate exposure, compared with just 24 percent of international respondents. Notably, 40 percent of survey respondents reported no real estate allocation whatsoever. However, family offices that cited inflation as their top portfolio risk held an average 16.3 percent allocation to real estate—double the general respondent pool.

Jason Ozur, CEO of wealth manager Lido Advisors, said the firm has invested in multifamily properties at 20 to 30 percent discounts to replacement costs. Lido Advisors is concentrating acquisition activity in major cities including Salt Lake City, Denver and Dallas. Ozur emphasized that even with attractive acquisition prices, investors must carefully evaluate leverage costs and rising insurance expenses to ensure real returns exceed inflation. He said cash flow generation and portfolio diversification represent stronger client motivations than pure inflation hedging.

Real estate also offers tax efficiency that appeals to family office investors. Ozur described strategies including depreciation deductions and 1031 exchanges, which allow investors to defer capital gains by reinvesting proceeds into like-kind properties. Clients can also gift real estate to children at discounted valuations over time, creating wealth transfer advantages. Jennifer Nellany, a real estate lawyer at Cozen O'Connor, noted that whenever inflation becomes a material concern, people gravitate toward tangible assets they can see and touch.

Data centers—widely considered the hottest segment in commercial real estate—remain difficult for family offices to access at attractive valuations, according to Nellany. She added that some family offices, particularly those with philanthropic missions, harbor concerns about the environmental impact of data center operations. Meanwhile, real estate investor Chaz Lazarian is doubling down on office properties through his firm Elle Family Office, targeting what many consider the least attractive segment of commercial real estate. Lazarian said he focuses on acquiring distressed office assets at severe discounts, betting on eventual market recovery.

The structural advantages family offices bring to distressed real estate cycles continue to manifest across asset classes and geographies. Their ability to underwrite longer hold periods, accept illiquidity, and move without committee approval creates pricing power that institutional capital cannot replicate. As traditional investors wait for clarity on interest rate trajectories and geopolitical stability, family offices are deploying capital into assets they believe will compound over decades rather than quarters.